sen. mack cole (r) sen. delwyn gage (r) sen. lorents...
TRANSCRIPT
MINUTES
MONTANA SENATE 54th LEGISLATURE- REGULAR SESSION
COMMITTEE ON TAXATION
Call to Order: By VICE CHAIRMAN MIKE FOSTER, on February 7, 1995, at 8:00 a.m.
ROLL CALL
Members Present: Sen. Gerry Devlin, Chairman (R) Sen. Mike Foster, Vice Chairman (R) Sen. Mack Cole (R) Sen. Delwyn Gage (R) Sen. Lorents Grosfield (R) Sen. John G. Harp (R) Sen. Dorothy Eck (D) Sen. Barry "Spook" Stang (D) Sen. Fred R. Van Valkenburg (D)
Members Excused: CHAIRMAN GERRY DEVLIN
Members Absent: None
Staff Present: Jeff Martin, Legislative Council Renee Podell, Committee Secretary
Please Note: These are summary minutes. Testimony and discussion are paraphrased and condensed.
Committee Business Summary: Hearing: SB 235, SB 273, HB 96
Executive Action: HB 96, SB 235
HEARING ON SB 235
Opening Statement by Sponsor:
SEN. KEN MILLER, SD 11, Laurel, explained he was asked by the Montana Manufactured Housing and R.V. Association to sponsor SB 235. He stated this simple bill was brought forward to clarify language in the statutes regarding the treatment of mobile home stock as business inventory. SEN. MILLER commented the current law is somewhat confusing, and this bill seeks to remedy this problem. He acknowledged in reality this bill reflects current DOR practice, making this bill revenue neutral.
Proponents' Testimony:
950207TA.SMl
SENATE TAXATION COMMITTEE February 7, 1995
Page 2 of 6
Stuart Doggett, Montana Manufactured Housing and R.V. Association, stated he worked with Jeff Martin on this bill. He said SB 235 reflects current practice taking place by the DOR, and urged support.
Mick Robinson, Director, Department of Revenue, commented SB 235 is considered technical clean-up. He said it does not have any impact on the DOR.
Opponents' Testimony:
None
Informational Testimony:
None
Questions From Committee Members and Responses:
SEN. MIKE FOSTER asked Jeff Martin to give a brief history of mobile home taxing. Mr. Martin stated mobile homes were taxed in a separate class prior to 1991, and under that classification business inventory and mobile homes were exempt. He said it appears the legislature didn't want to provide a double exemption.
SEN. BARRY "SPOOK" STANG asked Mr. Robinson if the law states mobile homes held by a dealer are not business inventories why were they being taxed as business inventories. Mr. Robinson said he wasn't sure why the language "business inventories aren't included" was added, and he isn't sure the division has a clear explanation why the language was included. He said the intention of exempting business inventories was very clear, but how the extension of mobile homes is included he can't explain why it's there.
SEN. DOROTHY ECK questioned Mr. Robinson in regard to what happens to a mobile home that is still owned by the dealer on a contract for sale. Mr. Robinson stated a dealer wouldn't sell an inventory item under a contract for deed. SEN. ECK asked Mr. Doggett if he could respond to the question. Mr. Doggett said many times when a dealer sells a mobile home the finance company will retain the title if it's going into a mobile home park or manufactured housing park. He said the mobile home will be financed as personal property, and the consumer will pay personal property tax on it.
Closing by Sponsor:
SEN. MILLER commented it is a simple bill and urged a do pass vote. {Tape: 1; Side: Ai Approx. Counter: II.B.}
950207TA.SM1
SENATE TAXATION COMMITTEE February 7, 1995
Page 3 of 6
EXECUTIVE ACTION ON SB 235
Motion: SEN. JOHN HARP MOVED SB 235 DO PASS.
Discussion: None
Vote: THE MOTION CARRIED UNANIMOUSLY.
HEARING ON HB 96
Opening Statement by Sponsor:
REP. DON LARSON, HD 58, Seeley Lake, stated HB 96 exempts vehicles owned by special districts like rural fire districts from vehicle registration fees, weed control fees, and the new car sales tax. He explained this bill makes a uniform action Qhroughout all 56 counties.
Proponents' Testimony:
James D. Lofftus, President, Montana Fire District Association, urged support for HB 96.
Roger Stevens, Flathead County Fire Fighters Association, encouraged support for standardizing the process.
Bob Gilbert, Montana Volunteer State Fire Fighters Association, commented the intent was not to tax these special districts; however, it wasn't stated clearly in the law. He said this is a good bill and urged support.
Bud Schoen, Motor Vehicle Division, stated this bill helps clarify which local agencies qualify for exempt plates.
Opponents' Testimony:
None
Informational Testimony:
None
Questions From Committee Members and Responses:
SEN. MACK COLE questioned REP. LARSON in regard to Page 4, the wording "irrigation districts" being crossed out and the language "special districts" being inserted. He asked REP. LARSON if the wording "special districts 11 covers irrigation districts. REP. LARSON answered, "Yes."
950207TA.SM1
SENATE TAXATION COMMITTEE February 7, 1995
Page 4 of 6
SEN. DOROTHY ECK asked REP. LARSON if school districts are considered special districts. REP. LARSON commented he wasn't certain. SEN. GROSFIELD read the meaning of special districts from the Montana Code Annotated. He stated school districts are considered special districts.
Closing by Sponsor:
REP. LARSON said this is a good bill to help keep volunteer districts viable. He requested SEN. BARRY "SPOOKII STANG carry the bill.
EXECUTIVE ACTION ON HB 96
Motion: SEN. GROSFIELD MOVED HB 96 BE CONCURRED IN.
Discussion: None
Vote: THE MOTION CARRIED UNANIMOUSLY.
HEARING ON SB 273
Opening Statement by Sponsor:
SEN. LOREN JENKINS, SD 45, Big Sandy, voiced concern in regard to why the coal tax wasn't put into a trust fund. He questioned if it was time to cap the fund. He acknowledged it is not his intent to touch the Treasure State Endowment program with this bill, only the money going into the permanent trust. SEN. JENKINS asked the committee to look at the bonding requirement of the Treasure State Endowment Fund. He attested he wants the bill to go to the vote of the people of Montana so they can decide whether it is time to cap this trust.
Informational Testimony: Ray Beck, Administrator, Department of Natural Resources, said SEN. JENKINS asked him to clarify a point. He attested he doesn't rise as a proponent or an opponent. He stated the department administers the severance tax loan prog~~m and this bill does not actually cap the trust. He explaineci it takes away the Constitutional protection of the trust, which would allow the legislature to cap the trust. Mr. Beck stated because the legislature does give some breaks on loans there is always less payment that comes into debt service account than funds available to payoff the loan. He asked that language be put into the bill recognizing the obligation of the bond holders and future borrowers.
Proponents' Testimony:
None
Opponents' Testimony:
950207TA.SM1
SENATE TAXATION COMMITTEE February 7, 1995
Page 5 of 6
Verner Bertelsen, Montana Senior Citizens Association, presented written testimony. EXHIBIT 1.
Ted Lange, Northern Plains Research Council, commented the coal trust fund is a permanent, reliable source of income for the State of Montana. He stated coal resources are a part of the state's endowment.
Chris Imhoff, Montana League of Women Voters, presented written testimony. EXHIBIT 2.
Gloria Hermanson, Montana Cultural Advocacy, urged a do not pass on this bill.
Don Judge, Executive Secretary, Montana State AFL-CIO, sent written testimony. EXHIBIT 3.
Questions From Committee Members and Responses:
SEN. FOSTER asked Mr. Robinson if he could give the committee a status report on the court case with the Crow Tribe. Mr. Robinson responded the state was victorious at the Federal Court level in Billings. He said the case has been appealed to the Ninth Circuit Court last week and it is possible the case could go to the U.S. Supreme Court.
SEN. COLE asked Mr. Robinson what figure is on the lawsuit. Mr. Robinson said it is in excess of $500 million.
SEN. HARP asked Terry Johnson if this bill would take effect for the 1997 biennium. Mr. Johnson answered January 1, 1997. SEN. HARP asked Terry Johnson if he knew what the estimate was for this biennium. Mr. Johnson answered approximately $40 million per year. He said the portion that would be going into the permanent trust would be approximately $20 million, and the portion going into the Treasure State Endowment Fund would be about $10 million. Mr. Johnson acknowledged there would only be $10 million available on an annual basis if the Treasure State Endowment is held harmless. SEN. HARP asked Mr. Johnson if there is $10 million in the fund right now. Mr. Johnson said by the end of FY'95 they are projecting there will be $31 million in the fund.
SEN. ECK asked Mr. Johnson how much money goes into the bonds and school construction fund. Mr. Johnson said in terms of the coal tax bond fund it serves as a temporary account which is used to make sure there is sufficient funds available to cover the costs of the bonds. He stated the annual cost is about $500,000 per year. He explained anything above that is distributed to the permanent trust in the Treasure State Endowment Trust, 50% to each one. Mr. Johnson related in terms of the school contingency account there is no additional funds going into that particular account. He said there is about $2.5 million sitting in that account for the purpose. Mr. Johnson presented a letter from
950207TA.SM1
SENATE TAXATION COMMITTEE February 7, 1995
Page 6 of 6
Mae Nan Ellingson, Dorsey & Whitney. EXHIBIT 4.
SEN. DELWYN GAGE questioned Anna Miller, Department of Natural Resources, in regard to bonds. Ms. Miller responded the state has issued to date $65 million worth of bonds. She presented a booklet titled "Budget Analysis 1997 Biennium." EXHIBIT 5.
, Closing by Sponsor:
SEN. JENKINS commented there is enough coal for 4,000 years in this state. He stated the interest leaves the trust intact. {Tape: 1; Side: A; Approx. Counter: 39.0; Comments: Speaker difficult to hear.} He affirmed he isn't sure how much bonding should be done.
Discussion regarding a possible committee bill: SEN. GAGE discussed trucking deregulation licensing. He suggested this issue may fit into SEN. CHARLES SWYSGOOD'S bill.
ADJOURNMENT
Adjournment: 9:07 a.m.
R NEE ~ Secretary
MF/rp
950207TA.SM1
ROLL CALL
I NAME
MACK COLE
DELWYN GAGE
LORENTS GROSFIELD
JOHN HARP
DOROTHY ECK
BARRY "SPOOK" STANG
FRED VAN VALKENBURG
MONTANA SENATE 1995 LEGISLATURE
TAXATION COMMITTEE
DATE
I PRESENT
v:: (/'"
V ~
V V V
MIKE FOSTER, VICE CHAIRMAN V GERRY DEVLIN, CHAIRMAN
SEN:1995 wp.rollcall.man CS-09
O~ LAA. // Y. /'77'. (/1
I ABSENT I EXCUSED I
V
SENATE STANDING COMMITTEE REPORT
MR. PRESIDENT:
Page 1 of 1 February 7, 1995
We, your committee on Taxation having had under consideration
~~ ~! ~~~~~~r~~af~~g copy -- blue), resp~~tfullY j)eport;,7;at HB
signed,4t,i. iiUA-i"'1
~Amd. s;:Jl Sec.
Coord. of Senate
Senator Gerry Devlin, Chair
Senator Carrying Bill 321311SC.SPV
.SENATE STANDING COMMITTEE REPORT
MR. PRESIDENT:
Page 1 of 1 February 7, 1995
We, your committee on Taxation having had under consideration
;~52~~ ~!~~~t reading copy -- white), re~pectfUl~ r~port~at 5B
Signed: ,t;/L/C i~\"~ Devlin, hair
Coord. of Senate 321236SC.SPV
")":~3,0:,::~," , ' ,
, " " ",i<~>~;'1\:~~f;;:;!'" .. ,',' "';""', " , ",', .' e,ar I y approved Jhegoa,1 s of;~tb.~;;Q:>a}';JClx :rr~"st~Clnd:"c6~:i,~Y In,g;,, , , J.js,to ,the Trust when they ,approved;the, fv1ontana, Canst Ifut I on 'I n, ,,'" " ,§t tt0t ion:cai,1 ed,'f~r a ded I,cated 25%deposi t for; ~e\,en~; yearsand"~;,, '-.cJepos I ts of 50% : from:then on ~~Th~i t.nJent of.t.he.ar:tjclewa!?\~to~;::,,' U()~s to th~';Ju~d, a,n,d, prov~i,de:~a\h,~a(t~YWq.~XIO,I~tA~>endo~rrient;?:;fo'r:,\:: ..
;;,of,'M()ntahans ;:,: The ,'goaL, wasto:co'~p'l?(lsat~' fut4r~,; generat Ions
, .,', ,,:t~~D0i,~~~i~,~;~~~;~:~.~'our~e. ,':, "<""i~~·~\;;\'i?,,2:~jJ;~:T~~'.'.,"(~.;:'>.I;:'~;~j;';~':J:~}: ',':, d'ameridment';would, undermine': the TfiJst's"'iritent'and"would
~l)~~\~¥;~~l;~1H}';' ijPf~j.:·~O:",~:,~:,a :::;(~t'D,~~~lt~~fI~.::;,e,:e~ i 5 :,i~.~·',;~I:t~~t~/1~%~~~,~~~j!~~~:'~~}\B:?';~:;; ".,'u" ;";' ,~"",,': Women~,Vote~'s;',o{ ,Montana stud i e9~tlQ,~,Eoali' s,(3,ve,ranfe tax and<
, e, LeagLfe; ,r:e":exarnl ned,' iti<lri :,t~~~::ari(ttr~aff I rmed,jts, pos it i on •
. ' .. ,I~+;u,~~e p,~~~~~,~;~t~{~~'~j e,~£;r~~~~i~~lj~:~~~~~~~~;l~:Q.~!~~~i·~e.~~:~·~·~~E:::'~I; uture generat Ions;·' The'fund < wasrcreated·Hor;<'.the,'future. <, . ' . " .
. < < ••. ,. ,n',.'" ,:<:i:;{',~;':S~~~::~j,~.'~&~)'7:,~:i;'#,~>, ~'~ ;'::';»:>.~', ' .. ' . , . " .' fund, Is a"method ofpC~~~[vL~g:'r~\,~ri,ueJrom:Cl~~te,mporary< tax < "
basejcoa.!, is nonrenewable/>therevEmue fr'om'the tax trust 'future'~generations long: after the mlneral:~'r~so'urce< has been'exhausted.
r"(for,/ future generat ions to benef it,thet~'u'st, <m~'st~r~ma i~' hea I thy and :,} l,n:9~der~'to,create. and rna I nta) n a' stro(i~{,trust,::"'we inustcont I nue to" fettaxrevenue to It.< ~s, long as those coal::severan'ce'taxes cont i nue to, flow
. ~~r'~t ~~~:,,+ re as u ry. ., <, ,,:, " < ·,,:,;,<·<~'.,\,~>;~,,1~~~/rf~i~{:,;'.'f ':;~::~.;:z~f<~::, '
, •. , u~;;;5g~~~rat i ons fac~'~' long-t~rm un know~ con~equences < of" ~~sou'rce 'deve I ~p-'., e';cu'rr~.n+·generatlon of Montanans,may,fee,lthat the coaL tax trust 'is big Jo~gr~pp'fe'with any consequences of resQurce,'development, but' the writers
~is"c6nstitutianal article knew that all of;theconsequences'could not be pre':' ed,' and that, ,the ir costS.COll I d not b'e caJcu I ated .. The Trust fund was created
" ..•.• fJrua)}y:~ grow. i norder: to"p rated. future':gener,at I ons,feom the unpred I dab Ie. ' , ,Iyrheed'\fd,'!'ook at our current superfund's jtes 'to understand the long-term' d~tab.1 e"'c:onsequences,oL resource deve IOpment ..... Cou I d Montanans In 1895 ever
,. ' 'J. ,,~~,~.l.JperflJnd slt,e? :We do notknow,whaj envlronm~ntal, cul,tural, and .. n,ce",the ,M?ntan?l 9s: ,of:. 20?5w i II,encounter as a result of coa J. ex-. rust,,'may'heIp"them\3ddress these problems, but it wi II not serve
, ertat i997flnancfal levels;<' " .... ' ... ,,',', ''',_:~~~~~:.'' .,.", . ",,~_~<,,<,~,_, .'. ';.. " _"'- 1"
, .... f.)!,~~-':',>\ : -:,-.",.-,;, .. , ,:.~ __ ", . - '. :,.If:, ',' .>,-~', ~. '"
"OfWomen',yoters of Montana opp,oses 'SB 273 and 'urges a do not pass. r"'lrnmcon .. " ,by\;fhecomm I ttee on This measure.' . Than kyou.
AF·""""''':''''.~· .. ,_-,;. -.';:-;,",. /r'f1.:~._<: ," .',"' - , .'". .'
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, ,
ontana State AFL -CIQ~'l' Jl'1.AlIOH
Donald R. Judge Executive Secretary
-'~=~=?J 110 West 13th Street, P.O. Box 1176, Helena, Montana 5962d, ,-r E ~~ Z l,1r3f06-442-1708
EXHiBiT NOP~-----
Sen. Gerry Devlin, Chainnan Committee on Taxation Montana State Senate Capitol Station Helena, Montana 59620
Dear Sen. Devlin:
BILL NO. ,j,6 ~p February 7, 1995
I was unable to attend the committee's hearing this morning on SB 273, to cap to the Penn anent Coal Severance Tax Trust Fund. I would appreciate it if you would enter this letter into the committee's hearing record on SB 273.
The Montana State AFL-CIO has long been a supporter of Montana's coal tax and the constitutionallv mandated trust fund. We believe that placing half of the coal tax proceeds into a trust fund recognizes that our mineral resources are non-renewable, and that future generations deserve some part of the bounty we reap from the mining of those nonrenewable resources.
We have strongly supported protecting the inviolability of the principal in the Pennanent Coal Severance Tax Trust Fund, and in continuing to build that principal by dedicating half the proceeds to the trust fund. We have strongly supported the use of the interest and investment proceeds from the trust fund for education, the arts, local communities impacted by mining, natural resource protection and other good uses.
The delegates to the Montana State AFL-CIO's annual convention considered capping the Pennanent Coal Scverance Tax Trust Fund a few years ago, and votcd to support maintaining the 50 percent dedication to the trust fund. That position has not been changed.
As a result \ye do not support SB 273, which \yould cap the trust fund at whatever balance is on record on Jan. 1. 1997. We belie~e-the state should continue to save half the proceeds of the coal tax for future generations, "ho eventually won't have any coal left to mine or from which to derive revenue.
Based on current position statements adopted by the Montana State AFL-CIO's convention delegates, we \\-ould have to oppose a ballot measure that asks the voters to cap the Pennanent Coal Severance Tax Trust Fund.
If you or the committee members have any questions about our position on SB 273, please don't hesitate to contact me.
Don Judge, Executive Secretar\-
cc: Senate Taxation Committee members
Printed on Union-made paper
MXNNE.A.POLXS
HXLLXNGS
:OES W:OXNES
Mark Simonich, Director
DATE ~~~~~~;"w ?S DORSEY & WHITNE~;[m NO __
A'PAItDnl .. mr~'D"O~""""'''''''''~. ~A ( .' ~.::? _ .J8. dA; J5?7......,/.!."(EW YORK
127 EAST FRONT STREET 5'OX'l':B 31.0
MISSOULA, }40Nl:ANA :59602
(400) 721-602l5 FAX (406) ~·OO&l
February 6, 1995
WASHINGTON.:O. O.
OllA.N'GE COUNTY, OA.
x..ONDON
:BRUSSELS
Department of Natural Resources and Conservation P. O. Box 202301 Helena, Mf 59620
RE: 5B 273
Dear Mr. Simonich:
Your staff has requested that we review and provide comments on SB 273, which would, as currently drafted, amend the Montana constitution to remove the constitutional requirement that at least fifty percent (50%) of the coal severance tax revenues be dedicated to the coal severance tax trust fund.
As you know, the State has issued several series of bonds that are secured by a pledge of the coal severance tax and this proposed a.rnendment raises the question of a potential impairment of the States's contract with the holders of outstanding coal severance tax bonds.
At the outset, it should be noted that we do not believe that the bondholders have any contractual right to the continued growth of the coal severance tax trust fund. As a matter of substance, the bondholders merely have a fi.n;t claim on the coal tax revenues as received and a contractual right to have the coal severance tax to be continued unbl the bonds are paid.
SB 273, as currently drafted, does not in and of itself provide for an alternative disposition of the 50% of the coal severance tax that is currently deposited into the coal severance tax trust fund after the proposed effective date, assuming that SB 273 is approved by the voters. Thus, it seems to us that until the legislature enacts other legislation, the provisions of Montana Code Annotated Section 15-35-108 would still govern the allocation of the coal severance tax receipts and under that prOvision,
DORSEY & WHITNEY
Mark Simonich, Director Department of Natural Resources and Conservation February 6, 1995 Page 2
50% of the colle(:tions would still be deposited into the trust fund. If SB 273 does obtnin the approval of the electors, the Legislature would be free, a~ a matter of constitutional law, as of January 11 1997, to amend Section 15-35-108 and it would be at that point that the real concern about impairment of contract would arise. Care would need to be given that not less than one half of the coal severance tax collections were initially deposited into the bond fund for the coal severance tax bonds and also passed through the school1oan guaranty fund.
It may be that there will be companion legislation introduced this session to implement SB 273 effective January 1, 1997, in the event that SB 273 is approved by the voters. If that is to be the case, we should watch ror that legislation to make sure that it meets wIth the foregoing requirement and does not impair the state's contract with its bondholders.
Please do not hesitate to call me if there are any questions.
MNE:ma
Very truly yours,
~)L&~ Mae Nan Ellingson Dorsey & Whitney P.L.L.P.
Dorsey & Whitney P.L.LP. is a Professional Limited Liability Partnership
r-__________ ~.a..J..JoTAXATION
D~TE ~~ zlt!S EXHIBIT NO.-=-.::J __
BILL NO. ciA 473 ..
BUDGET ANALYSIS 1997 BIENNIUM . VOL. I
OFFICE OF THE LEGISLATIVE FISCAL ANALYST HELENi\, f.l0NTANA . JANUARY 1995
TRUS'F FUNDS -- BALANCES AND INTEREST EARNINGS
Table 1 Selected Trust FUIld Balances
Including Projected Investment Earnings
Permanent Treasure St ('.om man I~es()u rcc Parks Arts Noxious Fiscal ('.oal Tax Endowment School Education Indcmnity AC<Juisitiorl P rotcet ion Weed Total Year Trust found Trust found Trust Fund Trust Fund Trust Flind Trust Fund Trust Fund Trust Fund Trllst Funa.
A 73 SO SO $64,223,773 SO SO SO SO SO 564,223,773 A 74 0 0 108,998,870 0 1.1.11,)85 0 0 0 110,140,255 A 75 0 0 113,064,188 0 3,287,456 0 0 0 116,351,644 A 76 0 0 117,849,628 2,227,793 5,552,291 278,725 0 0 125,908,437 A 77 0 0 123,281,528 6,039,530 8,232,2'17 758,308 0 0 138,311,613 A 78 6,268,262 0 129,949,247 8,983,763 10,646,851 1.174.356 0 0 157,022.479 A 79 16,940,538 0 137,716.735 12.339,549 12,574.209 1.475,732 0 0 181,046.763 A 80 39,964,765 0 147,527,943 23,905,146 16.204.531 3,565.371 0 0 231,167,756 A 81 75,187,459 0 163,163,556 33,624,170 21,165,464 5.325,746 0 0 298,466,395 ,\ 82 118,336,314 0 176,467.865 44,338,477 28,328.946 7,480,418 0 0 374,952,020 A 83 158,358,806 0 189.390.417 52,665,410 36.181,889 9.·181.542 0 0 446.078,064 A 84 202,936,358 0 201.319,109 60.925,268 42.986,128 11.565,460 0 0 519,732,323 A 85 252,420.524 0 214,764.544 70,500,922 47,396.179 13,859,181 0 0 598,941,350 A 86 309,384.250 0 217,677,906 79,761,708 53.039,675 16,222.131 0 443,184 676,528,854 A 87 339,883,180 0 227.687,073 44,091.429 56.861,627 16,(>13.603 0 824.550 635,961,467 A 88 381,180,287 0 239.553,633 33,671,110 61,750,961 16,581.042 0 1,070.972 733.808.005 A 89 411,83'.993 0 254,128,428 8.651.477 66,665.000 16,601'.706 0 1,320,720 759,213,324 A 90 446,511,416 0 261',496,362 0 72.811,618 17,936,701 0 1,688,370 807,444,467 A 91 470,322,655 0 280,326,496 0 77,324,921 11'.882.548 0 2,121,973 848,978,593 A 92 4%,465,569 0 291,753,603 0 82,489,898 12,588,366 7.051,506 2,584,254 892,933,196 A 93 511,474,640 0 300,782,863 0 86.890,369 12.538,119 6,863.579 2,534.844 921,084,414 A 94 511.7.~4.471 20.520.830 310,735,129 0 89,316,268 12.538.119 7.025.290 2.518.875 954,403,982
Foreastcd Fund Balance F 95 522,193,813 31,701,156 320,776,949 0 91,779,375 12.531'.119 7.308.599 2,500.000 988,798,011 F 96 532,669,644 42,915,167 330,873,476 0 94,047,996 13,106,221 7,592,762 2,500.000 1,023,705.266 F 97 5·12,547.783 53.504,215 340,942,649 0 96,261,888 13,642,662 7.861,038 2,500.000 1,057,260,285
Foreasted Investment Earnings F 95 41,806.569 1,720,541 23,879,598 0 7.764,110 887.866 506.328 240,000 76,805,012 F 96 41,R02.757 2.626,972 23,690,516 0 7.760,370 919.492 512.082 240,000 77,552.189 F 97 42.213,236 3.510,824 23.982,113 0 7.881.869 966.020 525,983 240.000 79,320.045
History of Selected Trust Fund Balances Actual alld Estimated
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I ,
.--EXHIBIT __ b ___ _
DATE ,;1-7 -q6' .. L 5"5 r713
(1) Within 30 days of the end of each calendar quarter, coal
severance taxes are paid to the state, 50 percent of which
are deposited in the Coal Severance Tax Trust Funds (the
Trust) by the Department of Revenue. Fiv~ accounts are
established ,within the Trust: 1) the Coal Severance Tax Bond
Fund, 2) the School Bond ContingeI .. cy Loan Fund, 3) the
Treasure State Endowment Fund, 4) the Coal Severance Tax
Permanent Fund, and 5) the Coal Severance Tax Income Fund.
Coal tax revenues which flow into the Trust are initially
deposited in the .Bond Fund and made available for payment of
debt service on the Coal Severance Tax Bonds (see footnotes
7, 8, and 9). The Department of Natural Resources and
Conservation (DNRC) will inform the Department of Revenue
during the first quarter of each state fiscal year, the
amount necessary to meet all principal and interest payments
on bonds payable from the Coal Severance Tax Bond Fund on
the next two ensuing semiannual payment dates. The
Department of Revenue will r~tain that amount in the Coal
Severance Tax Bond Fund.
(2) The January 1992 Special Legislative Session passed an Act
creating the Coal Severance Tax School Bond Contingency Loan
Fund. A total of $25 million of School Bonds were
authorized to be issued and secured by this fund. For as
long as there are any outstanding school district bonds
secured by the Contingency Loan Fund, an amount equal to the
next 12 months of principal and interest payments due on any
school bonds will be retained In the Contingency Loan Fund.
DNRC will give written notice to the Department of Revenue . .
in January of each year of exact amount needed to secure
School District Bonds. During the first month of each
quarter of the state fiscal year, 50 percent of the amount
in the Bond Fund excess of the amount required to be
retained therein and the amount needed to be transferred to
the Contingency Loan Funds secure outstanding School Bonds,
shall be transferred to the Treasure State Endowment Fund by
the Department of Revenue. The 1991 Legislature passed an
Act creating the Clean Coal Technology Demonstration Fund.
However, in the November 1993 Special Session this fund was
eliminated by HB 60. Proceeds of the Clean Coal Fund were
moved into the Trust.
(3) The Treasure State Endowment Fund was established when
voters approved the measure on the June 2, 1992 ballot.
During the first quarter of each state fiscal year, 50
percent of the amount'in excess of what is retained in the
Bond Fund and transferred to the contingency Loan Fund, will
be deposited in the Endowment Fund. Monthly, interest
earnings on amounts on deposit in the Endowment Fund, in an
amount necessary to meet the obligations of the state under
this program, are transferred to the Treasure State
Endowment Special Revenue Account by' the Department of
Revenue. Interest earnings not transferred to the Revenue
EXHIBIT 5 DATE c9-7 -q6
I 55 d-73_ Account are to be retained in the Endowment Fund.
(4) During the first month of each quarter of the state fiscal
year, 50 percent of the amount in excess of what is retained
in the Bond Fund ~nd transferred to the Contingency Loan
Fund will be transferred to the Coal Severance Tax Permanent
Fund. Twenty-five percent of the Coal Severance Tax
Permanent Fund is used for the purpose of making investments
in Montana. Investments are managed by the Board of
Investments.
(5) Investment income on the monies in the Eond Fund, the
Contingency Loan Fund ·and the Permanent Fund are
periodically transferred to the Income Fund. The only
exception to this is the Endowment Fund, any interest
earnings are either transferred to the Revenue Account or
retained in the Endowment Fund.
(6) In fiscal year 1994 eighty-five percent of the balance in
the Income Fund· is transferred to the state;s ·General Fundi
the remaining 15 percent is transferred to the state's
School Foundation Program on a monthly basis. In fiscal
year 1995 the entire balance in the Income Fund will be
transferred out on a monthly basis to the General Fund.
(7) Under the Coal ·Severance Tax Loan Prbg~am, the state sells
coal severance tax bonds and loans the proceeds to local
· . -
government entities for various water projects. The
borrowers make semiannual loan payments, which upon receipt
are credited to a Debt Service Account. The terms of the
loans ~ary, but .generally involve an interest rate subsidy
for the first five years of the loan followed by a direct
·pass-through of interest rate on· the Bonds for the remaining
life of the loan. The loan program and debt service
accounts are administered by the DNRC.
The Act creating the Endowment Fund also expanded the loan
authority from strictly water projects and now includes all
local government infrastructure projects approved under this
Act.
(8) Debt service payments on the Bonds are due each June 1 and
December 1. To the extent funds on hand in the Debt Service
Account from loan repayments are insufficient to pay
principal and interest on the Bonds when due, funds are
transferred to the Debt Service Account from the Bond Fund.
On January 1 of each year funds are transferred to the Debt
Service Account from the Bond Fund to the extent necessary
to cause the balance In the Debt Service Account to equal
one-twelfth of the next two ensuing semiannual debt service
payment. DNRC provides written notice to the Department of
Revenue if funds are needed to pay debt service or to make
the required transfer on January 1. On January 1 of each
year DNRC also sweeps the Debt Seriice Account of funds in
EXHIBIT_...::6~ __
DATE Ql-7 -q5 "L 55C)-73
excess of one-twelfth of the next. two ensuing semiannual
debt service payments. The excesJ is returned to the Bond
Fund in repayment of borrowed mon~y if necessary, or
deposited in the Renewable Resou~cos Grant/Loan Special
Revenue Account.
(9) On each June 1 and December.l, the state pays debt service
on the Bonds from amounts on hand in the Debt Service
Account. Payments are made by DNRC.
DATEiJ~ t /Cf~':r • SENATE COMMITTEE ON _~---,---=-+=-,-. ~~~ ______ _
BILLS BEING HEARD TODAY: r;;::Jc;?2,,3S'gJ~~ q£?£Z3 ~~~ ~: ~:z?
< • > PLEASE PRINT <. > Check One
Name Representing
(/"
V
N~C 213 v 10 "t" .. "\t ~ \ \J '" "'( ~~ 'r' crt, V ~\ .,. ~l \!..'(~ '9\~~
.:---
V
ME I c... ;2 73 X
VISITOR REGISTER
PLEASE LEAVE PREPARED STATEMENT WITH COMMITTEE SECRETARY